Euro Holds Strong Against Dollar Amid Economic Data and Rate Speculations
The euro retained its strength against the dollar, buoyed by solid euro zone business activity data and upcoming wage growth numbers crucial for ECB interest rate decisions. European currency movements remained focal, especially with German business activity signaling fluctuating trends and the Federal Reserve's dovish outlook affecting the dollar.
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The euro remained near its highest level in over a year against the dollar on Thursday, supported by robust euro zone business activity data and anticipation of upcoming wage growth numbers that will influence European Central Bank interest rate strategies. As of Thursday, the euro was steady at $1.1146, just below the $1.11735 peak reached on Wednesday, marking its firmest position since July 2023.
In recent weeks, the euro has been buoyed by a weaker dollar, driven by a dovish Federal Reserve and signs of softness in the U.S. job market that bolster the case for interest rate cuts. Attention will be on European data, particularly after a preliminary survey showed German business activity contracted in August for a second consecutive month, sparking initial declines before a rebound due to stronger euro zone-wide figures.
Upcoming wage growth data for the euro zone, expected at 0900 GMT, will be pivotal in shaping upcoming ECB policy decisions and the euro's trajectory. Andrzej Szczepaniak, senior European economist at Nomura, indicated that a significant slowing in second quarter 2024 euro area negotiated wage growth would support a rate cut in September. He added recent data from Germany and France points toward a moderation in wage growth to below 4% from 4.7% in the first quarter.
(With inputs from agencies.)
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